a study on lean supply chain implementation in … · table 2.5 the lean supply chain attributes...

A STUDY ON LEAN SUPPLY CHAIN IMPLEMENTATION IN

MALAYSIA’S ELECTRICAL AND ELECTRONICS

INDUSTRY: PRACTICES AND PERFORMANCES

By

AZMAN BIN DAUD

Research Report submitted in fulfillment of the requirements

for the degree of

Master in Business Administration

April 2010

ACKNOWLEDGEMENT

First of all I would like to thank Allah s.w.t for giving me power, patience and support to

complete this study. This research could not be possible without the guidance, help, and

encouragement of many individuals. Foremost among them is my supervisor Assoc. Prof. Dr.

Suhaiza Hanim Mohamad Zailani who provided me with support and advice throughout

preparation of this thesis. My sincere gratitude extends to the staff of School of Management,

USM who provided me with assistance with the SPSS software analysis. I am also indebted

to all companies who provided me with data to complete this research. Additional thanks to

my friends and fellow master students for their help and encouragement during my study.

Special thanks to my family, especially my beloved wife for her patience, care, moral

support, sacrifices, and encouragement to me in meeting the challenges I faced throughout

my study. My dearest parent, thank you for EVERYTHING...

TABLE OF CONTENTS PAGE

Acknowledgment i

Table of Contents

List of Tables ii

List of Figures v

Abstrak vi

Abstract vii

CHAPTER ONE: INTRRODUCTION 1

1.0 Introduction 1

1.1 Supply Chain 3

1.1.1 Global Supply Chain Issues 4

1.1.2 Supply Chain Issues in Malaysia 5

1.2 Background of the Study 6

1.2.1 Lean Basics 8

1.2.2 The Concepts and Importance Lean Supply Chain 12

1.3 Statement of the Problem 18

1.4 Research Questions 21

1.5 Research Objectives 22

1.6 Significance of the Study 22

1.7 Research Contributions 23

1.7.1 Theoretical Contributions 23

1.7.2 Practical Contributions 24

1.8 Definitions of Key Terms 25

1.9 Thesis Organizations 27

CHAPTER TWO: LITERATURE REVIEW 28

2.0 Introduction 28

2.1 The Lean Supply Chain Thinking: Introduction 28

2.2 Lean Supply Chain Basic 29

2.2.1 The Origin Begins 31

2.2.2 The Concepts of Lean Supply Chain 32

2.3 Components of Lean Supply Chain 38

2.3.1 Lean Suppliers 38

2.3.2 Lean Procurement 38

2.3.3 Lean Manufacturing 40

2.3.4 Lean Warehousing 40

2.3.5 Lean Transportation 41

2.3.6 Lean Customers 43

2.4 Barriers and Drawbacks 43

2.5 The Lean Supply Chain’s Practices 50

2.5.1 Demand Management 51

2.5.2 Waste Management 55

2.6 Lean Performances 56

2.7 Lean Supply Chain Performances 57

2.8 Lean Supply Chain Benefits 58

2.9 Proposed Research Framework and Hypotheses 59

2.9.1 Major Variables of Study 59

2.9.2 Lean Supply Chain Practices and Lean Performance 60

2.9.3 Lean Performance and Lean Supply Chain Performance 62

2.9.4 Lean Supply Chain Practices and Lean Supply 63

Chain Performance

2.9.5 Lean Performance Mediating Effect between Lean 64

Supply Chain Practices and Lean Supply Chain

Performance

2.10 Summary of the Chapter 65

CHAPTER 3: RESEARCH METHODOLOGY 66

3.0 Introduction 66

3.1 Unit of Analysis 66

3.2 Sampling Technique 67

3.3 Sample Size 68

3.4 Development of Questionnaire 69

3.5 Items for Lean Supply Chain Practices (Independent Variables) 70



3.6 Items for Lean Performance (Mediator) 73

3.7 Items for Lean Supply Chain Performances (Dependent Variable) 74

3.8 Statistical Analysis Techniques 76

3.8.1 Descriptive Statistics 76

3.8.2 Factor Analysis 76

3.8.3 Reliability Analysis 77

3.8.4 Regression Analysis 77

3.8.5 The Assumptions of Multiple Regressions 78

3.8.6 Testing the Mediating Effect of Supply Chain Quality 79

Practices


CHAPTER 4: SURVEY FINDINGS

4.0 Introduction 82

4.1 Response Rate 82

4.2 Profile of Firms and Respondents 83

4.3 Goodness of Measures 92

4.4 Factor Analysis 92

4.4.1 Factor Analysis for Demand Management 92

4.4.2 Factor Analysis for Waste Management 94

4.4.3 Factor Analysis for Lean Performances 95

4.4.4 Factor Analysis for Lean Supply Chain Performances 97

4.5 Reliability Test 98

4.6 Descriptive Analysis 99

4.7 Hypotheses Testing and Discussions 99

4.7.1 Regression Analysis between Demand Management 100

and Better Quality


and Faster Throughput

4.7.3 Regression Analysis between Demand Management and 103

Cheaper Cost


Improvement of Waste And Cycle Time Reduction


Supplier Engagement and Collaboration

4.7.6 Regression Analysis between Lean Performances and Lean 107

Supply Chain Performances

4.8.1 Multiple Regressions 110

4.9 Summary of the Results 130

4.9.1 The relationship of Lean Supply Chain Practices with 130

Lean Performances

4.9.2 The relationship of Lean Performances towards Lean 132



Lean Performances

4.9.4 The mediating effects of Lean Performances towards Lean 135

Supply Chain Practices with Lean Supply Chain Performances.

4.10 Summary of Chapter 138

CHAPTER 5: DISCUSSIONS AND CONCLUSIONS

5.0 Chapter Overview 141

5.1 Recapitulation of Findings 141

5.2 Discussion and Interpretation 143

5.3 Managerial implication, Limitations and Future Expectations 149

REFERENCES 151

APPENDICES

Appendix A: Questionnaire

Appendix B: SPSS Output

TABLE OF CONTENTS PAGE

Acknowledgement i

Table of Contents ii

List of Tables viii

List of Figures xii

Abstrak xiii

Abstract xv

CHAPTER ONE: INTRODUCTION 1

1.0 Introduction 1

1.1 Supply Chain 3

1.1.1 Global Supply Chain Issues 4

1.1.2 Supply Chain Issues in Malaysia 5

1.2 Background of the Study 6

1.2.1 Lean Basics 8

1.2.2 The Concepts and Importance Lean Supply Chain 12

1.3 Statement of the Problem 18

1.4 Research Questions 21

1.5 Research Objectives 22

1.6 Significance of the Study 22

1.7 Research Contributions 23

1.7.1 Theoretical Contributions 23

1.7.2 Practical Contributions 24

1.8 Definitions of Key Terms 25

1.9 Thesis Organizations 27

CHAPTER TWO: LITERATURE REVIEW 28

2.0 Introduction 28

2.1 The Lean Supply Chain Thinking: Introduction 28

2.2 Lean Supply Chain Basic 29

2.2.1 The Origin Begins 30

2.2.2 The Concepts of Lean Supply Chain 32

2.3 Components of Lean Supply Chain 38

2.3.1 Lean Suppliers 38

2.3.2 Lean Procurement 38

2.3.3 Lean Manufacturing 40

2.3.4 Lean Warehousing 40

2.3.5 Lean Transportation 41

2.3.6 Lean Customers 43

2.4 Barriers and Drawbacks 43

2.5 The Lean Supply Chain’s Practices 50



2.6 Lean Performances 56

2.7 Lean Supply Chain Performances 57

2.8 Lean Supply Chain Benefits 58

2.9 Proposed Research Framework and Hypotheses 59

2.9.1 Major Variables of Study 59

2.9.2 Lean Supply Chain Practices and Lean Performance 60

2.9.3 Lean Performance and Lean Supply Chain Performance 62

2.9.4 Lean Supply Chain Practices and Lean Supply 63

Chain Performance

2.9.5 Lean Performance Mediating Effect between Lean 64

Supply Chain Practices and Lean Supply Chain

Performance


CHAPTER 3: RESEARCH METHODOLOGY 66

3.0 Introduction 66

3.1 Unit of Analysis 66

3.2 Sampling Technique 67

3.3 Sample Size 68

3.4 Development of Questionnaire 69

3.5 Items for Lean Supply Chain Practices (Independent Variables) 70



3.6 Items for Lean Performance (Mediator) 73

3.7 Items for Lean Supply Chain Performances (Dependent Variable) 75

3.8 Statistical Analysis Techniques 76

3.8.1 Descriptive Statistics 76

3.8.2 Factor Analysis 77

3.8.3 Reliability Analysis 77

3.8.4 Regression Analysis 78

3.8.5 The Assumptions of Multiple Regressions 78

3.8.6 Testing the Mediating Effect of Supply Chain Quality 79

Practices


CHAPTER 4: SURVEY FINDINGS 82

4.0 Introduction 82

4.1 Response Rate 82

4.2 Profile of Firms and Respondents 83

4.3 Goodness of Measures 92

4.4 Factor Analysis 92

4.4.1 Factor Analysis for Demand Management 92

4.4.2 Factor Analysis for Waste Management 94

4.4.3 Factor Analysis for Lean Performances 95

4.4.4 Factor Analysis for Lean Supply Chain Performances 97

4.5 Reliability Test 98

4.6 Descriptive Analysis 99

4.7 Hypotheses Testing and Discussions 99


and Better Quality


and Faster Throughput


Cheaper Cost


Improvement of Waste And Cycle Time Reduction


Supplier Engagement and Collaboration

4.7.6 Regression Analysis between Lean Performances and Lean 107


4.8.0 Multiple Regressions 110

4.9 Summary of the Results 130


Lean Performances

4.9.2 The relationship of Lean Performances towards Lean 132



Lean Performances

4.9.4 The mediating effects of Lean Performances towards Lean 135

Supply Chain Practices with Lean Supply Chain Performances.

4.10 Summary of Chapter 138

CHAPTER 5: DISCUSSIONS AND CONCLUSIONS 141

5.0 Chapter Overview 141

5.1 Recapitulation of Findings 141

5.2 Discussion and Interpretation 143

5.3 Managerial implication, Limitations and Future Expectations 149

REFERENCES 151

APPENDICES 158

Appendix A: Questionnaire 158

Appendix B: SPSS Output 164

LIST OF TABLES

Page

Table 1.1 Typical Lean Supply Chain Benefits 17

Table 2.1 Taichi Ohno and Womack & Jones’s Type of Waste 30

Table 2.2 The Comparison between Conventional and Lean Model 35

Table 2.3 Lean Transportation 42

Table 2.4 The Lean Supply Chain Attributes Proposed by 46

APICS (2004) and Manrodt, Abott & Vitasek (2005)

Table 2.5 The Lean Supply Chain Attributes Proposed by Aberdeen 48

Group (2006)

Table 3.1 Sampling method and results 66

Table 3.2 Instruments of the Study 68

Table 3.3 Demand Management Facets 70

Table 3.4 Waste Management Facets 70

Table 3.5 Lean Performances Facets 72

Table 3.6 Lean Supply Chain Performances Facets 74

Table 4.1 Respond Rate of the Survey 81

Table 4.2 Profile of Sample Firms 82

Table 4.3 Profile of Respondents 83

Table 4.4 Profile of Sample Lean Adoptions 85

Table 4.5 Factor Analysis for Demand Management 91

Table 4.6 Factor Analysis for Waste Management 92

Table 4.7 Factor Analysis for Lean Performance 94

Table 4.8 Factor Analysis for Lean Supply Chain Performance 95

Table 4.9 Reliability Test 96

Table 4.10 Descriptive Statistics 97

Table 4.11 Regression analysis between Demand Management 98

and Better Quality

Table 4.12 Regression analysis between Demand Management and 99

Faster Throughput

Table 4.13 Regression analysis between demand management and 100

Cheaper Cost


improvement of waste and cycle time reduction


supplier engagement and collaboration

Table 4.16 Regression analysis between Lean Performance and 103

Lean Supply Chain Performance

Table 4.17 Multiple Regressions for Mediating Variable (better quality) 105

and Lean Supply Chain Performance (improvement of waste

and cycle time reduction)

Table 4.18 Multiple Regressions for Mediating Variable 106

(Faster Throughput) and Lean Supply Chain Performance

(improvement of waste and cycle time reduction)

Table 4.19 Multiple Regressions for Mediating Variable (Cheaper Cost) 107

and Lean Supply Chain Performance (improvement of waste

and cycle time reduction)

Table 4.20 Multiple Regressions for Mediating Variable (Better Quality) 108

and Lean Supply Chain Performance

(supplier engagement and collaboration)








Faster Throughput

Table 4.24 Regression Analysis between Waste Management and 112

Lean Performance

Table 4.25 Regression Analysis between Waste Management and 113

Lean Supply Chain Performance




Table 4.27 Multiple Regressions for Mediating Variable (Faster Throughput) 115









Table 4.30 Multiple Regressions for Mediating Variable (Faster Throughput) 117




and Lean Supply Chain Performance (supplier engagement and collaboration)

LIST OF FIGURES

Page

Figure 1.1 Fundamentals of Lean 11

Figure 1.2 Evolution of SCM 12

Figure 1.3 Cost versus Value Equilibrium 16

Figure 2.1 The Forrester Effect 44

Figure 2.2 The Effective Supply Train 45

Figure 2.3 Theoretical Framework 60

Figure 3.1 Four- Step Approach in Testing Mediating Effect 75

as Proposed by Baron and Kenny (1986)

Figure 5.1

The conceptual framework of lean supply chain practices, lean performance and lean supply

chain performances 142

Figure 5.2

The new restated framework of lean supply chain practices, lean performance and lean supply

chain performances variables. 147

KAJIAN TERHADAP IMPAK PELAKSANAAN RINGKASAN RANTAIAN

BEKALAN DALAM INDUSTRI ELEKTRIK DAN ELEKTRONIK DI MALAYSIA:

PELAKSANAAN DAN KEBERKESANNYA

ABSTRAK

Kertas kerja kajian ini adalah bertujuan untuk memenuhi tuntutan untuk pengenalpastian

pengetahuan, ilmu serta sumber-sumber yang dapat diutarakan secara teoritikal dan praktikal

serta menjadi rujukan kepada organisasi-organisasi yang berkaitan dalam menjayakan konsep

kebersandaran ringkasan rantaian bekalan ini. Kajian ini bertujuan mengenal pasti tahap

kebersandaran rantaian bekalan dipraktikkan dan keberkesanannya oleh syarikat - syarikat

atau organisasi sektor Elektrik dan Elektronik di Malaysia. Pendekatan rekabentuk yang

digunakan bagi kajian ini adalah regrasi hirarki pelbagai dan regrasi pertengahan atau

sederhana, bagi mengenal pasti dari segi pemboleh ubah statistik yang diuji kepada beberapa

kumpulan sasaran seperti pengurusan atasan, pertengahan dan bawahan yang terlibat secara

terus dengan pengaplikasi kebersandaran rantaian bekalan ini. Keputusan daripada regrasi

hirarki pelbagai dan regrasi pertengahan menunjukkan kos yang lebih rendah dicapai bagi

pembaziran (penyebad pembazuiran dalaman) dan pengurangan masa pemprosesan, diikuti

oleh kualiti yang lebih baik serta mutu pembekalan produk. Kekurangan kajian ini adalah

kesimpulannya bergantung kepada intepretasi penggunaan dan konsep "kebersandaran

rantaian bekalan". Memandangkan kaedah ini masih baru, maka pihak yang ingin

mengaplikasi kaedah ini perlu memahami konsep rantaian bekalan ini seluruhnya sebelum

dapat mempraktikannya. Jika salah mengaplikasikannya, ianya boleh menyebabkan

pembaziran yg pelbagai. Secara implikasinya, perhatian mesti dititikberatkan kepada pekerja

lapangan yg ingin mencuba konsep ini dan organisasi perlu menyediakan kemudahan jabatan

kebersandaran ringkasan ini supaya proaktif dalam memainkan peranan dalam mempraktikan

konsep ini sebagai satu strategi yg penting kepada organisasi. Kemudahan pengetahuan boleh

digunapakai dalam memperkenalkan praktis konsep kebesandaran ringkasan bekalan

rangkaian ini. Injuksi dari pihak badan kerjasama kerajaan seperti FFM, SME Corp dan MPC

juga perlu utuk memberi kesan yg terbaik terutamanya memberi fokus kepada kajian dan

pembangunan dalam bidang yg diutarakan ini. Pihak kerjasama ini perlu memberi

kemudahan dan peluang, latihan serta bengkel-bengkel dan seminar terutamanya kepada

industri kecil dan sederhana yg kian pesat membangun. Seterusnya, ianya memberi manfaat

secara keseluruhan terutamanya kepada badan kerjasama kerajaan untuk mengaplikasikan

keberkesanan konsep ini.

A STUDY ON LEAN SUPPLY CHAIN IMPLEMENTATION IN MALAYSIA’S

ELECTRICAL AND ELECTRONICS INDUSTRY:

PRACTICES AND PERFORMANCES

ABSTRACT

This paper fulfils an identified knowledge, information and resources that needs and offers on

theoretical and practical ways in order to have references for the organization in order to

promote the acceptance and implementation of lean supply chain performances. The purpose

of the study is to explain the extents of lean supply chain practices and lean performances

towards lean supply chain performances as experienced by Electrical and Electronics firms in

Malaysia. The extents of lean supply chain practices to be investigate as one of the best way

to a sense of total improvements within mentioned sectors. The analysis approach that has

been used in this study are simple regressions and multiple regressions in order to determine

whether it’s have the statistically significant to the existence of extensions between the set of

variables to be tested for several defined groups like top management, middle management

and lower management that directly involve in lean supply chain. Besides, it could help to

determine which of the independent variables account the most influences towards lean

supply chain performances in Malaysia. It was also utilized to determine which of the

independent variables would be main contributor to lean supply chain performances. The

finding from this analysis revealed that cheaper cost towards internal waste lead and cycle

time reduction were the most influential extended factors on lean supply chain performances,

followed by better quality and faster throughput towards supplier engagement and

collaboration. Whereas, demand signal component shows that there no direct influences

through lean performances and lean supply chain performances. These are to say that not the

demand signal factor doesn’t contributed enough to the lean supply chain performances but it

seems like the organizations giving less attentions to the demand signal activities. One of the

limitations of this study is that the conclusion drawn from the survey was principally due to

the variety of interpretations of what the term and concepts of “lean supply chain

performances” actually means. Since, this is a newly concept that need to adapt, it’s possible

that the lean practitioners should have a solid knowledge before they implement it. It’s a

waste of multiple of resources if doing it wrongly. From practical implications point of

views, attention should be given to improve employee participation and lean department

should play a proactive role in practicing the lean supply chain as a strategic tool. Hence, the

knowledge and information can be utilized to promote the acceptance and implementation of

lean supply chain practices. Government bodies can therefore focus on related factors for

further development of lean supply chain as a total improvement. Related government bodies

for manufacturing and operation such as FFM, SME Corp and MPC can therefore focus on

these factors for further research development of lean supply chain practices and

performances. These organizations can organize more training and seminars to smaller

manufacturing companies to expose the concept of lean supply chain upfront, as the concept

can consider new, limits to insufficient resources.

1

CHAPTER 1

INTRODUCTION

1.0 Introduction

Supply chain nowadays becoming a vital entity to the organizations performance

measurement and metrics, has received much attention from researchers and practitioners. To

support this, Gunasekaran, Patel (2001) and McGaughy (2004) have discussed that the role of

these measures and metrics in the success of an organization cannot be overstated because

they affect strategic, tactical and operational planning and control. Some more, the revolution

of SCM in the last decade has testified that an increasing number of companies seek to

enhance performance beyond their own boundaries (Boyson et al., 1999; Proirier, 1999).

Supply chain has been viewed on every perspective. According to Agarwal and Shankar

(2002), a supply chain is an inter-linked set of relationships connecting customer to supplier,

perhaps through a number of intermediate stages such as manufacturing, warehousing and

distribution processes.

Accordingly, Harland (1996) have clearly stated that supply chain also often refers

either to a process-oriented management approach to sourcing, producing, and delivering

goods and services to end customers or, in a broader meaning, to the co-ordination of the

various actors belonging to the same supply chain. Intense competition compels companies

to create close relationships with their upstream and downstream partner (Togar &

Ramaswami, 2004). In the competitive environment, most leading edge companies realized

that by transferring costs either upstream or downstream, they are actually not increasing

their competitiveness, since all costs ultimately make their way to consumers (Cigolini, Cozzi

& Perona, 2004). Hence, Cigolini, Cozzi and Perona (2004), have mentioned that supply

2

chain management guides firms to co-operate with a common goal to increase the overall

channel sales and profitability, rather than competing for a bigger share of a fixed profit. One

strategy for coordinating within and between firms with a focus on achieving efficiency,

eliminating waste or overburden and creating value in products is the concept of lean

management (Womack & Jones, 1996). Consequently, Vonderembse, Uppal, Huang, and

Dismukes (2006), highlighted on the strategies and methodologies for designing supply

chains that meet specific customer expectations. According to them, three different types of

supply chains can be defined:

1. A lean supply chain, which employs continuous improvement efforts which focuses

on eliminating waste or non-value steps along the chain.

2. An agile supply chain, which responds to rapidly changing, continually fragmenting

global markets by being dynamic, context-specific, growth-oriented, and customer

focused.

3. A hybrid supply chain, which combines the capabilities of lean and agile supply

chains to create a supply network that, meets the needs of complex products.

Lean thinking is focused on eliminating waste from all processes while enhancing

material and information flow along the supply chain (McCullen & Towill, 2001). The

impact of lean thinking as a strategy for the supply chain and not just manufacturing is

important and has received a lot of interest from both industry (including service) and

academia. Hence, the purpose of this study is to explore the implementation of lean supply

chain management practices in manufacturing industry in Malaysia, and identifies the impact

of these practices on lean supply chain performance.

3

1.1 Supply Chain

Supply chain management (SCM) is the term used to describe the management of the flow of

materials, information, and funds across the entire supply chain, from suppliers to component

producers to final assemblers to distribution (warehouses and retailers), and ultimately to the

consumer (Johnson& Pyke, 1999). Briefly, a supply chain is a collaboration of network of

retailers, distributors, transporters, storage facilities, and suppliers that participate in the

production, delivery, and sale of a product to the consumer. It is essentially made up of

multiple companies who coordinate activities to set themselves apart from the competition

(Keiztman, 2009). The supply chain process is a core business process of major importance

for the realization of business strategy. It determines numerous key performance indicators of

an organization and has a major impact in its profitability and competitiveness. Therefore,

supply chain can be considered as maybe the most suitable operational framework for a

transformation process to be based on (Fassoula, 2005).

According to Keiztman (2009), supply chain has three key parts. First is supply

focuses on the raw materials supplied to manufacturing, including how, when, and from what

location. Second is manufacturing focuses on converting these raw materials into finished

products and third is distribution focuses on ensuring these products reach the consumers

through an organized network of distributors, warehouses, and retailers. Agarwal & Shankar

(2002), supported that supply chain management consists of the coordination of demand and

supply of products. It involves the flow of product, information, and money between the

„trading partners‟ of a company‟s „supply chain‟ and services between a suppliers‟ supplier

and a customers‟ customer.

A supply chain is not limit to manufacturing and consumer products, a supply chain

can also be used to show how several processes supply to one another. For overall, supply

chain are applies in a total of processes in term of IT technology, finance, and many other

4

industries applications (Keiztman, 2009). Related to the supply chain performances, a supply

chain strategy defines how the supply chain should be functioned in order to compete in the

market (Fassoula, 2005). The strategy will evaluate in term of benefits and costs related to the

operation. Comparing between business strategy that are focus on the total direction of a

company wishes and approaches, supply chain strategy more towards on the actual operations

of the organization. This is because supply chain strategy will be use in order to meet a

specific organization‟s objectives and business goal (Keiztman, 2009).

1.1.1 Global Supply Chain Issues

Basically, several issues exist in the global supply chain processes. According to Huang,

Uppal and Shi (2002), there are three main problems that related to the supply chain. First is

the flow of information management in the supply chain was not instantaneous, therefore the

upstream members were not fully informed with market changes such as changing trends,

quantity of raw material needed etc. this impact which lead to a discrepancy in the number of

products to be manufactured. This issue has been supported by (Aberdeen, 2006), as known

as the “bullwip” effect in supply chain terminology.

Second issue is the enterprise does not form strategic alliances with their internal and

external suppliers, which could prove to be a source of weakness this issue has been dealt

with in the last few years and substantial improvements have been made in order to have a

better supplier‟s relationship. Martin (2007) stated that the organizational misalignment (does

not form strategic alliances) is the most reason for deployment failure. It leaves isolated and

poorly integrated improvement projects scattered across the supply chain. It is difficult to

accurately estimate business benefits in these situations. This is because; full implementations

of lean methods require implantation of precursor systems of key component of lean systems

for each having a unique set of tools and methods, which build on each other over time.

5

Third issue, the distribution was not recognized for its important roles in cutting down

cost and lead time, and increasing the availability of finished products. It also could cause

delay on product differentiation, so that the customization could not be achieved and over-

stocking and stocks-out could not be avoided. The realization of these shortcomings led to the

development of lean supply chain. There a lot of improvement to make supply chain more

effectives.

1.1.2 Supply Chain Issues in Malaysia

From the Malaysia's perspectives, the complexity of issues in the supply chain provides the

real insights in term of the actual supply chain businesses and activities influence the actual

current business situation in Malaysia. According to a report from Ernst (2004), Malaysia‟s

electronic industry is practicing value-chain-based manufacturing and cluster-based

development as industrial key competencies for upgrading strategy. Evidences showed that

most of the challenges discussed related to supplier relationships; Rosnah (2004) and

(Ndubisi et al., 2005) stressed that supplier relationships are the major problem to implement

a smooth supply chain practices in electric and electronics firms in Malaysia. Same goes to

Tareq and Suhaiza (2009) in which, they found that the relationship orientation with supplier

is important when implementing green supply chain. In addition, IBM Malaysia Global

Business Consulting Services (2010), trading partners (suppliers) collaboration is of main

focus agenda of supply chain improvement. Besides, the focus on top-line revenue growth,

some how experiencing challenges in several areas, including:

due to excess and obsolete inventory; cost pressures incurred and profits decreased

customer satisfaction decreased due to lack of available-to-promise (ATP); low

commitment on-time products or services delivery

lack of e-procurement; not consistently delivered as promise of value

6

point solutions have not accurately fixed certain of issue across the entire value chain

lack of product innovations; competitors advantage lead market share.

To overcome such of the situations, the improvement of shareholders values (through

cost reduction and accelerated growth) and excellences of suppliers relationship, the approach

of lean concept in the supply chain management are being viewed, as it also another area of

opportunities in the windows of supply chain performance (IBM Malaysia Global Business

Consulting Services, 2010). Nowadays, the implementation of lean becoming trends and it

does consistently prove to make improvement and performance to supply chain businesses as

overall.

1.2 Background of the Study

Manufacturing has evolved from the ages of craft production and mass production to more

recent lean manufacturing (LM) and agile manufacturing (AM) (Anand & Kodali, 2008).

Along with these developments in manufacturing, the field of SCM has also evolved and

grown rapidly. Since the manufacturing and supply chain (SC) of an organization are closely

related, the developments that happen in one will affect the other. As a result of mass

industrialization and supply chain consumption around the world, lean supply chain concerns

are increasing in importance and effect on business objectives and performance. This section

basically, provides background information about the evolution of lean initiatives in the

context of world and Malaysia in particular, and explains the effects of the lean supply chain

performances and its expected role in providing advantages and opportunities to business

organizations. For instance, Ariff and Ahmed (2005) used a case study of a medium-sized

industry in Malaysia to present strategies to instill supplier capabilities and the support

activities in creating a lean supply chain across multiple tiers of Small and Medium-sized

Industries (SMIs). On the other hand, Christopher (2000) provided a distinction between the

7

philosophies of „leanness‟ and „agility‟, apart from discussing the appropriate application of

these agile ideas in supply chains.

As mentioned, in a globally-competitive economy, enterprises must pay continuous

attention to increasing responsiveness to changes in customer demand and to maintenance of

a competitive advantage over their rivals. According to Agarwal and Shankar (2002), as part

of this constant review and search for improvement, supply change management has become

an area of studies, since it focuses on material, information and cash flows from vendor to

customers or vice-versa. Supply chain activities also are argued to have connection with

humanitarian aid which often treated as a series of discrete activities (Taylor & Pettit, 2009).

On the other hand, McGuire (2001), concluded that each aspect should be seen as part of a

continuum has not generally been a priority, often leading to large amounts of waste

(McGuire, 2001). As a study from Malaysian perspectives, for many organizations,

developing the lean production system is a key element is their supply chain management

practice (Rozhan & Rohayu, 2008). Therefore, in their study, they have recommended that

the company need to focus on:-

Improve value delivery to customers;

Rely on just-in-time system;

Eliminate waste;

Get the involvement of all stakeholders in the value creation process;

Develop close collaboration;

Work closely with suppliers;

Reduce the number of suppliers; and

Develop efficient suppliers (Shadur & Bamber, 1994)

Nowadays, the concerns of having an effective lean supply chain systems becoming

so important. But it has been highlighted by Anand and Kodali (2008) that the theory and

8

concepts of lean supply chain is not yet fully developed, although a lot of recent publications

regarding lean supply chain can be seen in journals. Gomes and Mentzer (1988) also

highlighted “that in spite of the potential for gains, utilization of lean principles in strategic

logistics has been hampered by a lack of consistent definition of the concept across functions

and a lack of an overall systems approach to guide empirical research.” From point of views,

lean supply chain concept is important especially on current growing supply chain system in

Malaysia business perspectives and environment. Therefore, it is interesting to study on the

lean supply chain practices which are suitable to be applied to improve performance of lean

and lean supply chain. Since the study is new, it will be expected to have such on excellent

results on lean supply chain practices and performances in Malaysia.

1.2.1 Lean Basics

There are lots of definitions available to define “Lean”. For example, The National Institute

of Science and Technology (NIST/MEP, 1998) defines Lean as “A systematic approach to

indentifying and eliminating waste (non-value added activities) through continuous

improvement by following the product at the pull of the customer in pursuit of

perfection”(Buzby, Gerstemfeld, Voss & Zeng, 2002). Simply, lean means to create more

value for customers with fewer resources, in other words, the fundamental ideas is to

maximize customer value while minimizing waste. Actually, the word “Lean” was first used

in the Future Car Investigation by MIT professors to interpret Japan‟s new production system

that do away with mass production (Womack et al., 1991; Macduffie & Helper, 1997; Conti

et al., 2006) since it produces much waste. “Waste” is defined as anything that interferes with

the smooth flow of production (Macduffie & Helper, 1997). The eight wastes highlighted in

TPS are overproduction, waiting, conveyance, over processing, excess inventory, movement,

9

defects and unused employee creativity, and the biggest one being overproduction (Monden,

1998; Liker, 2004).

Wu and Wee (2009) concluded that the term “lean” means a series of activities or

solutions to eliminate waste, reduce non-value added (NVA) operations, and improve the

value added (VA). This VA and NVA concept were derived mainly from TPS. A lean

organization understands customer value and focuses its key processes to continuously

increase it. The ultimate goal is to provide perfect value to the customer through a perfect

value creation process that has zero waste. To make Lean success, level of thinking need to

be change in order to focus of management from optimizing separate technologies, assets,

and vertical departments to optimizing the flow of products and services through entire value

streams that flow horizontally across technologies, assets, and departments to customers

(Lean Enterprise Institute, 2009). Eliminating waste along entire value streams, instead of at

isolated points, creates processes that need less human effort, less space, less capital, and less

time to make products and services at far less costs and with much fewer defects, compared

with traditional business systems. Companies are able to respond to changing customer

desires with high variety, high quality, low cost, and with very fast throughput times. Also,

information management becomes much simpler and more accurate (Lean Enterprise

Institute, 2009). The fundamentals of lean are shown in Figure 1.1:-

Lean philosophy emphasizes eliminating waste, simplifying processes, and

continuous improvement. Lean is about doing more with less: less time, effort, space

and money.

Lean strategies allow manufacturers to systematically and continuously eliminate the

waste that results from inefficient processes, which can include inventory, over

production, waiting, transportation, motion, over processing, and defective products.

Optimizing inventory and streamlining manufacturing processes are two commonly

10

deployed lean manufacturing strategies because automotive manufacturers realize that

cumbersome business processes have added inefficiencies, costs and weeks to the

industry‟s mass production business model.

Lean enablers are the tools that make the strategies work for lean planning and

execution, JIT sequencing, consignment inventory, Vendor-Managed Inventory.

Figure 1.1:

Fundamentals of Lean

LEAN

PHILOSOPHY Elimination of Waste

Continuous Improvement Simplicity

LEAN MANUFACTURING

STRATEGIES Optimize Inventory

Streamline Manufacturing Processes

LEAN ENABLERS

Lean Planning and Execution

JIT Sequencing

Consignment Inventory

Vendor-Manage Inventory

100% Partner Connectivity

Warehousing

Adapted from QAD Inc, White Paper on ‟Streamlining for Success: The Lean Supply Chain‟

(2003)

According to Anand and Kodali (2008), only in recent times, researchers have

emphasized that the theory and principles of lean and its associated tools, techniques,

practices and procedures can be extended outside the boundaries of an organization to its

supply chains. However, the concept of lean supply chain was proposed in 1994, when the

proponents of lean manufacturing, Womack and Jones (1994) envisioned the concept of „lean

enterprise‟. Womack and Jones (1994) realized that applying lean principles to achieve

11

individual breakthroughs can be linked up and down the value chain to form a continuous

value stream that creates sells and serves a family of products; thereby, the performance of

the whole stream can be raised to a dramatically higher level. However, approaching the

supply chain process through lean manufacturing principles is still a complex task (Anand &

Kodali, 2008). This is supported by McKee and Ross (2009) in which they claimed that the

concept of supply chain is perhaps the most critical management concept and practice

shaping today‟s business. According to the Council of Supply Chain Management

Professionals (2008), supply chain can be defined as encompassing “the planning and

management of all activities involved in sourcing and procurement, conversion, and all

logistics management activities. It also includes coordination and collaboration with channel

partners, who can be suppliers, intermediaries, third-party service providers and customers.

The supply chain management concept has evolved with it through the five distinct stages

shown in Figure 1.2 below.

Figure 1.2:

Evolution of SCM

to 1960s

Stage 1

1970s-1980s

Stage 2

1980s-1990s

Stage 3

1990s-1999

Stage 4

2000-

Stage 5

Warehousing and

Transportation

Total Cost

Management

Integrated

Logistics

Management

Supply Chain

Management

Total Cost

Management

Management focus

Operations

performance

Efficiencies

Management

focus

Optimizing

Operation Costs

& Customer

Services

Management

focus

Tactics/Strategies

Logistics

Planning

Management focus

Supply Chain

Strategies, Chanel

Co-evolutions, Goals

Management focus

Internet, e-business,

e-marketing, SCM

Synchronizations

Organization Design

Decentralized

Functions

Organization

Design

Centralized

Functions

Organization

Design Integrated

of Logistics

Functions

Organization Design

Partnering Virtual

Organizations

Market Co-evolution

Organization Design

Networked Chanel

.coms, Exchanges

Agility/Scalability

Adapted from McKee & Ross (2009)

12

According to McKee and Ross (2009), stage 1 is the era of logistics decentralization.

In stage 2, logistics began the evolution from functional decentralization to organizational

centralization driven by new attitudes associated with cost optimization and customer service.

Stage 3 represents the dramatic expansion of logistics from a narrow concern with internal

cost management to new concepts calling for the linkage of internal operations with

analogous functions performed by trading partners. As the concept of trading partner

collaboration grew, the old logistics model gave way in stage 4 to full-blown SCM. In year

2000s, the application of lean concepts to closely integrated trading-partner networks is

driving stage 5, lean SCM. Lean SCM is a supply chain operational and strategic

management philosophy that utilizes Internet-enabling technologies to effect the continuous

regeneration of supplier and service partner networks (McKee & Ross, 2009). A lean supply

chain network is empowered to execute superlative, unique customer-winning value at the

lowest cost through the collaborative, real-time synchronization of product/service transfer,

demand priorities, vital marketplace information and logistics delivery capabilities.

Consequently, the following subsection will discuss on the concept and importance of lean

supply chain.

1.2.2 The Concepts and Importance Lean Supply Chain

Several researchers, such as Lee et al. (1997) and Lummus et al. (2003), explained that the

information transferred from one stage to another in supply chain tends to be distorted and

can misguide upstream members in the production decisions, resulting in wastes, thereby

affecting the coordination between the different stages of a supply chain. Lean supply chain

continuous improvement processes to focus on the elimination of waste or non valued-added

functions. These waste and non value-added stops across the supply chain and reduce set of

times to allow for the economic production of small quantities. Therefore archiving cost

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reduction, flexibility and aiming for external responsiveness by responding to customer

requirements (Turkett, 2001). Whereby, back to the views of Booth (1996), he stated that for

the internal responsiveness, the organizations adopted and time-based competition paradigm,

which ensure that development and production time is compressed, thereby archiving higher

responsiveness and profitability, justifying higher prices for enhanced customer service and

leading to a rapid innovation and lower cost of quality.

“A lean supply chain is a great enabler for any organization that strives to

become more lean and efficient. Organizations within a lean supply chain are

able to leverage their own lean journey more easily, delivering better customer

value by responding more efficiently, quickly, and predictably to customer needs.

That, in turn, facilitates the operation of the lean supply chain, creating a

virtuous cycle that ultimately translates to superior financial performance for

these organizations”.

Industry Weeks, 12 Sept. 2007

Martin (2007) committed with other two components that related to good foundation

of excellence for a Lean program. These are performance-based metrics and operational

standardization to minimize process variations. Unfortunately, not every organization has the

discipline to adopt these systems due to a combination of poor education, incorrect

measurements and improper resource alignment. From these arguments, Turkett (2001),

Booth (1996) and Martin (2007) has the similarity of lean philosophy to banish waste or

Muda or non value-added activities in order to define the successful of lean adoption itself as

to focus on whole improvement internal-externally on performance-based metrics and

operational standardization. The adoption must happen across the entire supply chain

therefore it is very important to educate the entire chain to address down towards lean culture

in the target organization. To value on the lean adoption in some organizations, it has been

supported by an excellence research on lean adoption by APICS, Oracle, and Supply Chain

Vision. There are collaboration among top research companies like APICS, Oracle, Supply

14

Chain Vision & Georgia Southern University (2004) to study on surveys on the development

and adoption of lean principles in supply chain management. It does not represent an

endorsement of a particular company, methodology, or solution, but rather, it demonstrates

APICS' efforts to provide the insight into current issues and emerging in the supply chain

trends.

The research focuses more on the adoption of lean in the demand management,

standardization, waste and culture across the supply chain behaviors. Lacking of poor and

inadequate practices of Lean philosophy and common organization practices are major

concerns on Supply Chain improvement (APICS, Supply Chain Visions, Oracle Corp. and

Georgia Southern University, 2004). From the research paper done by APICS, Supply Chain

Visions, Oracle Corp. and Georgia Southern University, 2004, the surveys has come out with

a process that call “Lean Supply Chain Best Practice Process Framework”, which is the

framework to be used as a tool for companies to help and identify the potential gaps in their

processes. Implementers and practitioners can use this tool to identify every single aspects

and points on the companies‟ process strengths and weaknesses. On top of that, they can

focus on their efforts on those areas where the improvement efforts will be drive the most

benefit. End results can be shared and compared (with discretion) with other organizations in

the supply chain to improve overall effectiveness.

15

Figure 1.3:

Cost Versus Value Equilibrium

Source: Hines, Holweg and Rich (2004)

Hines, Holweg and Rich (2004) have come out with an interesting structure of lean

supply chain study on the comparison between cost versus values of equilibrium. Figure 1.3

highlights the relationship between value and cost, and shows how products or services can

be plotted with regards to their relative cost-value proposition to the customer. Added by

McGill and Slocum (1993), the elaborations on the cost-value equilibrium, in which, claimed

that if a product or service can be positioned, the more attractive proposition it is to the

customers. Furthermore, the argument of cost-value equilibrium denotes the situation

whereby the product provides exactly as much value, which the customer is willing to pay

for, as the product costs. To explain further:

Value is created if internal waste is reduced, as the wasteful activities and the

associated costs are reduced, increasing the overall value proposition for the

customer.

Cost – Value

Equilibrium

Creating Lean Solutions

1. Reduce Internal Waste

2. Develop Customer Value

Customer –

perceived

Value of

Product or

Service

Cost of Product or Service

1

2

16

Value is also increased, if additional features or services are offered, which are valued

by the customer. This could entail a shorter delivery cycle or smaller delivery batches,

which might not add additional cost, yet add customer value.

To summarize the above discussions, a critical point in the lean thinking is the focus

on to eliminate waste and increase value and cost. However, Hines, Holweg and Rich (2004)

supported that, value creation is seen as equal to cost reduction and his represents a common

yet critical shortcoming of the understanding of lean. Some point been discussed by Ilyas,

Shankar and Banweet (2008), the underlying theme in lean thinking is to produce more or do

more with fewer resources, which is product value, while giving the end customer exactly

what they want. In other word, it means to focus on each product and its value stream. In

addition to Ilyas, Shankar and Banweet (2008), organizations must be ready to ask and

understand which activities truly create value and which ones are wasteful. Martin (2007) has

describes that supply chain will benefits for typical lean practices that have been classified for

a certain improvement area such as in the Table 1.1.

Table 1.1:

Typical Lean Supply Chain Benefits

Category Improvement

1. Process Development 25%-75%

2. Labor 15%-50%

3. Floor Space 25%-50%

4. Errors 25%-90%

5. Excess Capacity 25%-75%

6. Throughput Time 25%-95%

7. Delivery Time 25%-80%

Source: Martin (2007)

Table 1.1 shows that the typical lean supply chain benefits are sourced by seven

categories of improvements. Windows of improvement for most categories can be specifying

17

human related improvement, operation related improvement and processes related

improvement. The most contribution is operation related improvement; the categories are

Floor Space (25% - 50%), excess capacity (25% - 75%), throughput time (25% - 95%) and

delivery time (25% - 80%). Then follow by human related improvement, the categories

involve are labor (15% - 50%) and errors improvement (25% - 90%). The less contribution is

process related improvement, the categories specifying only process development (25% -

75%).

Besides value, lean supply chain thinking emphasizes quality for each product from

the perspective of the end-customer; Lean producers rely on confrontational strategies to

compete head-on-head for market share by developing competitive advantages (Comm &

Mathaisel, 2004). To successfully engage in confrontation, a firm must become expert at

developing low-cost, high-quality products that have the functionality customers demand

(Cooper, 1996). According to Ilyas, Shankar and Banwet (2008), lean is how an ideally

designed and operated supply chain should function. A supply chain must flows back from

deliveries to the store or to the customer warehouse back through to purchase orders placed

on suppliers. Additionally, for many years the philosophies of “leanness” and “economies of

scale” have dominated manufacturing, but market pressures now apparently implemented a

strategic and tactical framework that allows companies to behave in an adaptive or flexible

manner that permits continuous evolution in markets (Ilyas, Shankar & Banwet, 2008).

The important thing to highlight is lean is not simply just about eliminating waste, it‟s

also about eliminating waste and enhancing value (Tompkins, 2003). He discussed, value are

measured in the main components of the lean supply chain – lean suppliers, lean

procurement, lean manufacturing, lean warehousing, lean transportation and lean customers.

From the aspects of a lean supply chain, organization need to take a look on speed and

responsiveness to customers, reduced inventories, reduced costs, and improved customer

18

satisfaction, therefore supply chain as a competitive weapon (Schultz, 2006). Lean is a

concept that has evolved over time, and will continue to do so. As a result of this

development, significant confusion about what is lean, and what is not has arisen, a fact that

clearly observable at both academic and practitioner conferences in logistics and operations

management (Hines, Holweg & Rich, 2004). In addition, they have investigated a framework

that explains the developments of the lean concept over time to discuss on:

[1]. . What are the key stages of the lean evolution?

[2]. . Within these stages, what are the key criticisms? And subsequently;

[3]. . Are these criticisms justified?

Consequently, the study concerns are more on the fundamental questions, such as:

Why is lean supply chain required? What are the processes that are typically carried out in an

lean supply chain? What are the wastes in the supply chain processes? Furthermore, the

different tools, techniques, practices and procedures (elements), which can be used in lean

supply chain to eliminate wastes. Hence, a conceptual framework describing what constitutes

as lean supply chain practices is proposed in this study.

1.3 Statement of the Problem

The inventions and developments in achieving a high degree of flexibility and customer

responsiveness have progressed tremendously over the last century, starting from the

industrial revolution in the 18th

century (Aberdeen Group, 2006). However, the excessive

developments, have led to the unwanted production called as waste (Womack et al., 1990).

According to Anand and Kodali (2008), wastes can be defined as any activity that does not

add value during the conversion of resources (which are predominantly raw material) into a

product/service as desired by a customer.

19

Lean application is seen as one of the sensible solutions which are being adopted by

many countries around the world to address the issues of waste. Suzaki (1987) reports seven

types of waste identified at Toyota: waste from overproduction, waste of waiting time,

transportation waste, processing waste, inventory waste, waste of motion, and waste from

product defects. Consequently, Japanese automobile manufacturers achieved high quality and

low costs in their production is by removing buffers and impediments from the system.

Principles of lean thinking have been broadly accepted by many manufacturing operations

and have been applied successfully across many disciplines (Poppendieck, 2002). While

many researchers have studied on lean (Akel, Tommelein & Boyers, 2004; Shah & Ward,

2007; Liker & Wu, 2000; Worley, 2004, Hayes & Pisano; 1994, Shah & Ward, 2003;

Sánchez & Pérez, 2001; Karlsson & Åhlström, 1996), little studies regarding lean have been

done in Malaysia. This is agreed by Wong, Wong and Ali (2009) in their study. Their study

was initiated with a focus to examine the adoption of lean manufacturing in the electrical and

electronics industry by looking at various issues such as its understanding among the

respondent companies, its benefits and obstacles, the tools and techniques used.

Lean excellence is a coordinated response to today's highly competitive environment

(Williams, 2008). As the success of lean has become more widely known, it is being adopted

by many industries and is spreading into many other areas of the value chain. Interestingly,

starting the concepts from lean manufacturing, newly developed supply chain paradigms and

systems are always examined in relation to leanness. More and more, firms are witnessing a

transformation in which lean practices has been applied to logistics and supply chain

management (Abbot, Manrodt & Visatek, 2005). Papadopoulou and Ozbayrak (2003) have

stated that leanness serves in most cases as the landmark paradigm with which comparisons

are being drawn between the latter and recently pioneered approaches. They further argued

that in an organization, supply chain encompasses all aspects of the systems but the

20

integration of seamless full working systems is undoubtedly expensive but many companies

can cut all the waste from the system to ensure seamless and effective operation. In addition,

wastes are created due to the improper flow of materials, information and funds within the

supply chain (Anand & Kodali, 2008). For example, if the suppliers of a manufacturer are

supplying only in bulk and if the lead times are longer, then the time of the manufacturer is

wasted.

Among other examples are:- Baum (2004) commented that around $250 to $400

billion are wasted annually in North American industries alone due to inefficiencies in the

supply chains. They estimated that this amount would be as big as $1 trillion worldwide.

Taylor (2006) identified some of the wastes (i.e., issues and problems) in pork supply chains

and classified them into wastes related to product flows, wastes related to information and

wastes related to management and control. Al-Hakim (2005) detailed the relationship

between waste reduction and supply chain strategies and argued that the competitive

advantage of a supply chain can be viewed as an ongoing process of acquiring control over

different types of waste. Daniel and Womack (2002) differentiated between traditional lean

and lean supply chain. According to them, the focus of traditional lean is delivering value to

the customer. The primary mechanism for improvement is removing waste from the

organizations processes with customers in mind. On the other hand, the lean supply chain

concept is built on the broader goal of providing value to the customer by optimizing the

performance of the supply chain as a system. A typical lean supply chain involves integrating

all the upstream and downstream activities into a coherent whole and only very few papers

that addressed the concept of applying lean manufacturing principles to the whole of supply

chain are available (Anand & Kodali, 2008). In a simple term, lean supply chain can be

defined as an application of lean manufacturing principles to supply chain to integrate the

21

activities of all the stakeholders involved in the supply chain network and provide „value‟ to

the customers by eliminating wastes.

Following this, IBM (Malaysia) Global Business Consulting Services, (2010)

highlighted that to deliver products at the total cost while having top notch excellences in the

value-added processes is a major challenge to the lean supply chain practices and

performance. Realizing the importance of the lean as a competitive weapon in supply chain,

the Malaysian government has extended the role and function of the Malaysia Productivity

Center (MPC). MPC is now spearheading the effort to prepare local industries to compete

globally by automating their lean supply chain management processes (Malaysia Productivity

Center, 2009). A survey needs to be carried out in order to gauge how organizations in this

country practice it. The purpose of this study, therefore, is to investigate the level of lean

supply chain practices by the electrical and electronics companies in Malaysia in which that

the lean supply chain will be one of the most excellence way in business practices towards

supply chain performance. Ducharme and Lucansky (2002) supported that lean supply chain

is to create the values and opportunity of business process improvement and sustainability.

Foremost, at the same time it will be providing continuous profitability towards Malaysian

business environment.

1.4 Research Questions

In the context of lean supply chain practices, the coverage of the scope will include the

investigations in a sense of:

1. What are the extents of implementation for lean supply chain practices in

Malaysia?

2. What are the effects of lean supply chain practices on the performance of the

lean in Malaysia?

22

3. What are the significant relationships between lean performances with lean

supply chain performance in Malaysia?

4. Does lean performance mediate the relationships between lean supply chain

practices and with lean supply chain performance?

1.5 Research Objectives

The objectives of the study as follows:-

1. To investigate the extent of implementation for lean supply chain practices in

Malaysia.

2. To examine the effects of lean supply chain practices on the performance of

the lean in Malaysia.

3. To identify the significant relationships between lean performances with lean

supply chain performance in Malaysia.

4. To examine whether lean performance mediate the relationships between lean

supply chain practices and with lean supply chain performance in Malaysia.

1.6 Significance of the Study

Malaysia is a well known as a developing country that having strong economy activities and

economy policies. Starting from the basic of agricultural base economy changing to hi-tech

manufacturing sectors that involving the demand of the global economic growth. The current

situations are the populations of electric and electronics operations sector expanding together

with the demand of supply chain management aggressively. The needs and concerns towards

the effectiveness of supply chain management systems are vital, so the study of current trends

is important in order to benefit supply chain performances. Lean supply chain study is seeing

one of the best options to explore, and the expected end results should be answered the

23

questions of the study proposed, so that the significant of lean supply chain practices and the

effects of lean supply chain performance in Malaysia is very important. Significantly,

anything associates with lean supply chain, its promoting banish waste and increase values

stream for supply chain systems.

1.7 Research Contributions

This study attempts to enrich the research contributions in the aspects of:

1 - Theoretical contributions to knowledge and;

2 - Practical contributions to business and public organizations.

1.7.1 Theoretical Contributions

Due to some increasing concerns and needs to the lean supply chain effectiveness, there are

general guide lines on the importance of lean supply chain. There are very few studies have

been conducted to investigate the issue, especially in Malaysia. One evidence on supply chain

study related supply chain improvement, more towards focusing on issues and challenges to

logistics and supply chain improvement (Rosena, Harlina & Sabariah, 2008). However, they

do not specifically focus on lean supply chain itself. This study expected to contribute the

knowledge on practices and performances on lean supply chain in Malaysia, especially in the

Malaysian Electric and Electronics operation sectors. Accordingly, this study is expected to

add to the following areas of knowledge about lean supply chains:

1. The study identifies lean supply chain practices that are implemented in the

Malaysian Electric and Electronics sector and portrays their extent of practices.

Since that information from the literature review findings are lacking, the study

can add considerable information in this area and provide a fundamental for future

studies about the issue.

24

2. The study identifies lean performance as a mediator for lean supply chain

practices in the Malaysian context and reveals the influence of lean performance

factor on lean supply chain practices. This can add to the knowledge about how

lean supply chain practices are constraint among organizations in Malaysian

context. This knowledge can also enrich theories that deal with constraints of

innovations or practices among organizations, such as lean philosophy and the

theory of constraints.

3. The study identifies the lean supply chain performance from lean supply chain

practices and shows the influence of each type of lean supply chain practices on

the lean supply chain performance. This can add to the knowledge about the value

and importance of lean supply chain initiatives to organizations and the society at

large.

1.7.2 Practical Contributions

Accordingly, the study is expected to improve and enhance the knowledge and performance

of supply chain systems for organizations in Malaysian Electric and Electronics business as

following ways.

1. The study discloses the objective, concept, significance, and performance of lean

supply chain practices, thus, it can increase practitioner‟s understanding of the

importance and value of lean supply chain practices. This understanding is very

critical due to the increase of economic importance of supply chains in addition to

their role in enhancing competitive power of companies in international markets.

2. The study shows that key performance for the implementation of lean supply chain

practices, therefore, it can enhance the understanding of the important of lean supply

chain practices in the organizations. This knowledge of information can help the lean

a study on lean supply chain implementation in … · table 2.5 the lean supply chain attributes...

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